Efforts to develop commercial ventures on the Moon and elsewhere can be consistent with the Moon Treaty. (credit: Anna Nesterova/Alliance for Space Development)

Why it’s a bad idea to weaken the Moon Treaty

by Dennis O’BrienMonday, March 5, 2018

In two recent articles in The Space Review1, Vidvuds Beldavs argues that the Agreement Governing The Activities Of States On The Moon And Other Celestial Bodies, commonly called the Moon Treaty, must be revised so that investors in a future space economy can achieve a sustainable return on their investments. Although the creation of a sustainable economic model in outer space is essential for humanity’s future there, his proposed revisions throw out the baby with the bathwater.

The perceived problem and proposed remedy

Beldavs’ main concern, shared with many others, is that the declaration in the Moon Treaty that outer space is the “common heritage of mankind” (CHM) precludes the establishment of property rights sufficient to establish and sustain a space economy. As stated in the first article, co-written with economist Jeffrey Sommers:

How could the huge investments required for development of infrastructure and enabling technologies needed to develop a self-sustaining space economy be justified unless investors on Earth can realize returns that are competitive with other investments?

If an investment cannot lead to rights to realize economic returns from the investment, it would be irrational. Rights to economic returns from investments, or property rights, or use rights, are a necessary pre-condition of rational investment decisions. If the Outer Space Treaty (OST) excludes economic rights to resources in outer space, how can a space economy even emerge?

To address this concern, Beldavs makes specific proposals in the second article:

I propose the following modifications to the Moon Treaty to clarify that the treaty is consistent with US national interests and the goal of advancing space development. No doubt other suggestions would emerge, if this course were to be followed.

“Article 11, paragraph 1: [current language]
The moon and its natural resources are the common heritage of mankind, which finds its expression in the provisions of this Agreement, in particular in paragraph 5 of this article.”

The definition of CHM in the Moon Treaty implies a concern with economic benefits to humanity as a whole. It creates an obligation that if it becomes feasible to exploit lunar resources to increase economic benefits to mankind this should be encouraged. Revised text:

“The moon and other cosmic bodies and their natural resources are the common heritage of mankind to explore and to use. While the moon is a subject of interest for mankind as whole this does imply that the moon and its resources are the property of mankind or that rents should be collected by an international authority for their use, which finds its expression in the provisions of this Agreement, in particular in paragraph 5 of this article.”

(Note: It appears that Mr. Beldavs intended to say, “this does not imply that the moon and its resources are the property of mankind or that rents should be collected…” Otherwise the paragraph and his entire argument do not make sense.)

The short answer to these concerns is that the international regime of laws will provide private enterprise the necessary legal rights and protections while ensuring that the benefits of commercialization are realized by all of humanity. But that legal structure and the agency that implements it must have the underlying legal and moral authority that the CHM and the Moon Treaty provide.

Analysis

As an example, let us look at the most specific proposed revision of the Treaty, that the CHM “does [not] imply that the moon and its resources are the property of mankind or that rents should be collected by an international authority for their use.” We should first note that the “collection of rents” (aka leases, use fees, etc.) is common on Earth whenever public resources are developed by private enterprise. Although some public land is kept wild and pristine, much of it is leased by governments to allow the extraction of minerals, growing of crops, and grazing of animals. Payments to the government allow the people of that nation realize the benefit of the use of their land. So, too, would such payments allow all of humanity to realize the benefits from the use of its common heritage.

The international regime of laws will provide private enterprise the necessary legal rights and protections while ensuring that the benefits of commercialization are realized by all of humanity.

The real issue at this time is how such payments would be collected and distributed. A new agency, perhaps an Agency for International Development of Outer Space, could be created to receive such revenues and determine their best use, including distributing them to less-developed countries. The structure, policies, and procedures of any such agency would need to be determined as part of the “international legal regime” created by the parties to the Treaty. But if the CHM was weakened and the authority to collect revenues was specifically removed from the Treaty, then there would be no legal basis for such an agency and no incentive for the space-faring nations and companies to create a mechanism to share the economic benefits of space commerce with the rest of humanity. For all practical purposes, the Treaty would be dead.

Although some oppose such a regime of laws and regulations on a philosophical basis, most businesses want a legal regime that they can rely on to reduce the uncertainty that investors deplore. Even Beldavs and Sommers acknowledge this:

If rights to economic benefits cannot be guaranteed, there will be little if any investment. Property rights are one example of rights to economic benefits of an investment. Mining rights and land use rights are other examples. Internationally accepted rules have not been developed for assigning mining or use rights to resources on the Moon or elsewhere in outer space.1

Others make similar arguments. “The most important point is that companies are asking for this regulation. It’s not really so much what the regulation is but that there is regulatory clarity. Right now, because there are no clear regulations on these activities, companies are afraid,” said Mark Sundahl, director of Cleveland-Marshall College of Law’s Global Space Law Center.2

“There is a need for an international regime, whether through adoption of a binding treaty or soft-law mechanisms, because it will ensure compliance with the principles of international space law, increase legitimacy of space-mining activities, provide legal certainty to stakeholders, and develop an approach to benefit sharing. An adaptive governance approach of addressing issues step-by-step and involving all actors in the discussion would be most effective,” siad Tanja Masson-Zwan, deputy director of the International Institute of Air and Space Law at Leiden University.3,4

The proposed solution is to allow the private ownership of property in outer space. But the right to economic benefits does not require private ownership. Such rights can be guaranteed by the leases, use permits, and so on provided by the international agency that is established by treaty. That is the kind of certainty that allows for rational economic decision-making.

The alternative is uncertainty and conflict, resulting in costly litigation or worse. According to Melissa K. Force, an attorney and consultant for the aerospace industry, “Any action designed to resolve the issue [of use of outer space resources] without international agreement will ultimately be subjected to the risk of litigation.”5

There seems to be a consensus that private enterprise needs legal certainty to assess the risk of any endeavor. The only question is whether we establish a legal structure through international cooperation or face inevitable conflict as nations try to enforce their own notions of “property” and “ownership.”

The only question is whether we establish a legal structure through international cooperation or face inevitable conflict as nations try to enforce their own notions of “property” and “ownership.”

Leases are only one possibility for sharing the benefits of the use of outer space. Another is a value-added tax, to be applied when anything of value is brought into an economic system. For example, the first time that hydrogen mined from water in space is sold for fuel, the VAT would be applied, with those funds going to the CHM program. Thereafter the resource would be treated like any other commodity. Indeed, the VAT might be the primary method for satisfying the CHM mandate for physical resources.

The fee-for-use model might be more appropriate for enterprises that generate income through a service rather than a product, such as a hotel or other tourist attraction on the Moon. This could even be applied to a private robotic Moon lander that streamed a continuous image of the Earth for a fee. It is precisely because such enterprises are imminent that a legal structure is imperative.

Another area of concern is intellectual property. The space treaties seem to require that any technology that is used in the exploration and development of outer space must also be shared with less-developed countries. Beldavs and others fear that this would strip entrepreneurs of the protections provided by intellectual property laws, particularly patent laws. But the international regime of laws could satisfy the CHM by simply requiring that such patents and technology be made available to others, not that it be free. Enterprises would be required to share their advances, but they would still be able to charge a fee. Exorbitant fees would be avoided by regulations capping them, just as is done with monopolies and regulated industries in developed countries. Reduced fees might be available for developing countries, perhaps subsidized from other revenues collected. Again, the solution is not to deprive the Moon Treaty of its equitable sharing mechanism, but to use it wisely and explore a full range of options.

Using the revenues created to assist developing countries is not just theoretical. It is already possible to fund a space mission that directly engages such countries. The United Nations recently announced an agreement with Sierra Nevada Corporation to use SNC’s Dream Chaser reusable spaceplane to carry the experiments of dozens of countries to orbit and safely return them when their science is complete.6 The technical plans are very detailed, and outreach has already begun. Only the funding is needed, funding that could come from benefits of space commerce that other countries/companies are beginning to realize.

These examples demonstrate the variety of mechanisms that are available when adapting any legal regime to the many and varied subdisciplines of space economics, another concern of the authors. The Moon Treaty itself acknowledges that any such equitable sharing of benefits must consider all interests:

An equitable sharing by all States Parties in the benefits derived from those resources, whereby the interests and needs of the developing countries, as well as the efforts of those countries which have contributed either directly or indirectly to the exploration of the moon, shall be given special consideration. – Moon Treaty, Article 11, Paragraph 7(d).

Private enterprises are included in “those countries which have contributed,” as defined in Article 14, Paragraph 1 of the Treaty.

With all due respect for those arguing against the Treaty and its protection of the common heritage of mankind, it does not destroy private economic rights. Rather, it calls for the creation of an international regime of laws that protects those rights. Those who perceive an economic advantage in projecting their own country’s laws into space will fight that, but those who wish to benefit all of humanity will support it.

The current US administration appears ready to fight it. When its new Space Policy Directive One on returning to the Moon was announced in December, Vice President Mike Pence stated, “We will also ensure, lastly, that the rules and values of space exploration are written with American leadership and American values.”7 The charter of the Users Advisory Group of the revived National Space Council states that, “The UAG will provide advice and recommendations on matters including, but not limited to… Strategies to ensure U.S. leadership in the economic development of outer space.”8

Scott Pace, the executive secretary of the Space Council, was even more direct:

“In a rapidly changing environment of nanosats, ‘mega constellations,’ and commercially available on-orbit servicing or rendezvous and proximity operations, creating new legally binding agreements is unlikely to be timely or successful. On the other hand, non-legally binding guidelines, based on international consensus, can be reflected in national law and regulation. In this way, we can address rapid technical changes without subordinating U.S. activities to new trans-national authorities.”9

The title of the Council’s latest public meeting is further evidence of the Administration’s intent: “Moon, Mars, and Worlds Beyond: Winning the Next Frontier.”10 Although a couple of attendees, most notably National Security Advisor H.R. McMaster, spoke of the need to cooperate with other countries, no one even mentioned international agreements. The theme of the conference was to streamline United States laws and regulations to support the extension of its commerce, corporations, and legal system into outer space.

The weakening of the CHM in the Moon Treaty thus would destroy not only its legal authority for an international regime of laws, but also its moral authority to affect customary international law.

Given this constant drumbeat against an international legal regime, Beldavs and others are to be forgiven for proposing to weaken parts of the Moon Treaty to save the rest of it. But it is important to keep the stronger language in the Moon Treaty, even if it is not officially ratified by the space-faring nations. As Pace acknowledged above, “non-legally binding guidelines, based on international consensus, can be reflected in national law and regulation.”

The influence of an unratified but strong Moon Treaty is detailed in an article by attorney Michael Listner:11

Even with only six nations [now seven] ratifying the Moon Treaty, the fact that eleven other nations [now fifteen], including Australia, France, and India, have acceded to or become signatories to the Moon Treaty creates a shadow of customary law that could grow such that non-parties could find themselves overshadowed by the penumbra of the Moon Treaty, especially if those non-parties take no action to refute its legitimacy…

A potential game-changer that could give strength to the shadow of the Moon Treaty is the possibility that either Russia or China could decide to throw its diplomatic weight behind the Moon Treaty. The status of both countries as non-parties to the Moon Treaty contributes to its repute as a failed treaty; however, the opposite would true if either or both nations at the very least signed or acceded to the Moon Treaty. Such an action would not only revive the Moon Treaty’s reputation, but it would also expand the shadows of customary law engulfing parties and non-parties alike…

Assuming that the Moon Treaty has no legal effect because of the non-participation of the Big Three is folly. The shadow of customary law and its ability to creep into the vacuum left vacant by treaty law should not be underestimated… The true test of the Moon Treaty both as treaty and customary law will not come until the exploitation of extraterritorial resources becomes technically and economically feasible. The question is when that time comes, will the shadow of the Moon Treaty have grown sufficiently to blanket parties and non-parties alike under the penumbra of customary international law?

The weakening of the CHM in the Moon Treaty thus would destroy not only its legal authority for an international regime of laws, but also its moral authority to affect customary international law. Humanity would cede control of its own destiny to the unseen hand of economic forces and political power. This would be a far greater “loss of sovereignty” than any loss feared by individual nations.

Secondary concerns

Beldavs proposes a second revision to address the functions of the international legal regime called for by the Moon Treaty:

“Article 11. paragraph 5: [current language]
States Parties to this Agreement hereby undertake to establish an international regime, including appropriate procedures, to govern the exploitation of the natural resources of the moon as such exploitation is about to become feasible. This provision shall be implemented in accordance with article 18 of this Agreement.”

The revised text of Article 11, Paragraph 5 includes the idea that the international regime needs to be efficient, absorbing as few resources in its administration as practicable. Its formulation should encourage commercial development of outer space to lead to greater benefits to humanity and increased prospects for promoting higher standards of living and conditions of economic and social progress as called for in Article 4, paragraph 1.

“States Parties to this Agreement hereby undertake to establish an international regime, including appropriate procedures, to govern the exploitation of the natural resources of the moon as such exploitation is about to become feasible. The international regime needs to be efficient and encourage commercial development where this would be feasible. Multiple regimes need to be considered due to the very different conditions present on the Moon in contrast to other cosmic bodies. This provision shall be implemented in accordance with article 18 of this Agreement.”

Although his intentions are laudable (and understandable, considering the drumbeat against “inefficient” and “inflexible” government), the language he proposes would be better placed in the mission statement of any future agency, not the founding document that authorizes the creation of a legal regime. Founding documents create authority and set parameters for its use. Efficiency and flexibility in implementation are assumed. Although I have no problem with the language, amending the Treaty just for that purpose opens the door to amending it for other purposes, which would be disastrous. It would be much cleaner—indeed, more efficient—to make such declarations part of the “international regime of laws” that are required to implement the policies set forth in the Treaty.

Conclusion

Legitimate concerns have been raised about the viability of private enterprise in outer space under the “Common Heritage of Mankind” provisions of the Outer Space and Moon Treaties, and the “international legal regime” mandated by the Moon Treaty. The proposed solution is to allow private property rights in outer space and to remove from the Moon Treaty the authority to create economic mechanisms that would assure that all humanity would benefit from space commerce.

Full implementation of the Moon Treaty will protect businesses while releasing the creativity and innovation that have long been the hallmark of free enterprise. At the same time, it will ensure that all of humanity benefits from space exploration and commerce, that no one is left behind.

That solution is not only harmful to humanity, but also to free enterprise. Businesses need the certainty that a legal regime provides to make rational economic decisions. Humanity needs the protections that a legal regime provides so that everyone will share the benefits realized from the exploration and use of outer space.

We are currently living in an age when war, violence, and neglect are weighing heavy on the human spirit. People are increasingly feeling out of control of their own lives and are losing hope for the future. Our mission, the mission of the Moon Treaty, is to restore that hope, to create that shining city on the hill that will light the way for all.

This is not the time to shy away from our responsibilities. There will be only one time when humanity leaves its home planet, one chance to establish a pattern that will ripple far into the future. Full implementation of the Moon Treaty will protect businesses while releasing the creativity and innovation that have long been the hallmark of free enterprise. At the same time, it will ensure that all of humanity benefits from space exploration and commerce, that no one is left behind.

Dennis O’Brien is a retired attorney and former member of the NASA-Hastings Law Project. He recently founded The Space Treaty Project (spacetreaty.org) whose mission is to educate people about the benefits of the Moon Treaty. His latest book, Major Tom, explores space law and space commerce in the context of a race to establish the first permanent human settlement on the Moon.